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01/11 04:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Qifu Technology's earnings call highlighted strong financial performance, with significant increases in non-GAAP net income and EPS, and a robust share repurchase plan. The Q&A section revealed stable asset quality and positive management outlook, despite macro uncertainties and increased marketing expenses. The strategic initiatives and optimistic guidance for 2025 support a positive sentiment. However, concerns about regulatory impacts and increased delinquency rates temper the outlook slightly. Given the company's market cap, the stock price is likely to see a positive movement of 2% to 8% over the next two weeks.
Total Revenue RMB4.69 billion, up from RMB4.15 billion a year ago (13% increase). The growth was driven by increases in on-balance sheet loans and lower early repayment discounts.
Revenue from Credit Driven Service (Capital-Heavy) RMB3.11 billion, up from RMB3.02 billion a year ago (3% increase). The sequential growth was mainly due to increases in on-balance sheet loans and lower early repayment discounts.
Revenue from Platform Service (Capital-Light) RMB1.58 billion, up from RMB1.14 billion a year ago (39% increase). The growth was mainly due to strong contributions from ICE and other value-added services.
Non-GAAP Net Income RMB1.93 billion, up from RMB1.21 billion a year ago (59.9% increase). This increase reflects strong earnings growth and proactive share repurchase.
Non-GAAP EPS (Fully Diluted) RMB13.53, up from RMB7.58 a year ago (78.5% increase). The increase was driven by strong earnings growth and share repurchase.
Sales and Marketing Expenses Increased by 42% year-over-year. The increase was mainly due to larger volume contributions from API channels in both new and existing users.
90-Day Delinquency Rate 2.02%, down from 2.09% in the previous quarter. This indicates improved loan performance.
Cash from Operations RMB2.81 billion, down from RMB3.05 billion in the previous quarter. The decrease was due to seasonal factors.
Total Cash and Cash Equivalents RMB14.03 billion, up from RMB10.36 billion in the previous quarter. The increase was mainly due to net proceeds from the USD 690 million convertible bond issuance.
Total New Provision for Risk Bearing Loans Approximately RMB2.23 billion, up from RMB2.07 billion in the previous quarter. The increase was due to higher risk-bearing loan volume and a higher provision booking ratio.
Write-backs of Previous Provisions Approximately RMB1.14 billion, up from RMB1.02 billion in the previous quarter.
Provision Coverage Ratio 666%, up from 617% in the previous quarter. This indicates a historical high in provision coverage.
Leverage Ratio 2.7 times, near the low end of the historical range.
Share Repurchase Approximately USD 405 million in total for 2025, including commissions, demonstrating management's confidence in the company's future.
AI-Plus Credit Strategy: At the start of this year, we began rolling out our AI-Plus credit strategy at scale, aimed at building the industry's first AI agent platform to empower core credit processes.
AI Agent Platform: In April we introduced an internal AI Agent platform and by May deployed five digital employees across key functions such as data analytics, operations, compliance, risk management strategy and financial reconciliation.
User Profiling Agent: We developed a user profiling agent that performs consistency checks on user features with over 95% accuracy, supporting differentiated credit lines and pricing based on user profiles.
Embedded Finance Business Expansion: In Q1, we added seven new channels spanning from leading Internet platforms and various small and mid-sized platforms to banks in multiple regions.
Technology Solutions Partnerships: We established partnerships with three additional mid-to-large sized municipal banks in Q1, driving loan volume from this segment to grow by roughly 144% year-over-year.
Operational Efficiency: Our take rate for the quarter reached 5.7%, up 2.2 percentage points year-over-year.
Funding Costs: We expect funding costs for the coming quarters to decrease slightly from Q1 levels.
Loan Volume Growth: Loan volume increased by 15.8% year-over-year during the quarter.
Share Repurchase Program: We expect our total repurchases this year to be no less than USD 680 million.
AI Native Organization Transformation: We plan to recruit an additional 100 algorithm engineers by the end of the year and accelerate our transformation into an AI native organization.
Macroeconomic Risks: The company acknowledges macroeconomic headwinds and uncertainties, particularly due to the complex international landscape and trade war impacts, which could affect China's economic recovery.
Regulatory Risks: New regulations from China's National Financial Regulatory Administration on Internet loan facilitation may impose stricter guidelines, requiring compliance and adaptation from the company.
Risk Management: The company is focused on managing overall risk exposure, particularly in light of macroeconomic uncertainties, and is taking a conservative approach to provisions against potential credit losses.
Delinquency Rates: The 90-day delinquency rate is at 2.02%, with a slight increase in day one delinquency to 5.0%, indicating potential challenges in maintaining credit quality.
Funding Costs: While funding costs have decreased, the company remains vigilant about maintaining negotiating leverage and managing funding costs in a fluctuating market.
User Acquisition Risks: The company plans to adjust the pace of new user acquisition due to volatile macro conditions, which may impact growth and user engagement.
Operational Efficiency: The company aims to enhance operational efficiency amidst uncertainties, which poses a challenge in maintaining growth and profitability.
AI-Plus Credit Strategy: At the start of this year, we began rolling out our AI-Plus credit strategy at scale, aimed at building the industry's first AI agent platform to empower core credit processes.
Recruitment of Algorithm Engineers: We plan to recruit an additional 100 algorithm engineers by the end of the year to accelerate our transformation into an AI native organization.
Deep Bank Division: We have established our deep bank division, which is driving the research and development of our AI Plus bank agent products.
Embedded Finance Business: Our embedded finance business remains a key strategic focus as we continue to expand both the breadth and depth of our channel coverage.
Share Repurchase Program: We expect our total repurchases this year to be no less than USD 680 million.
Q2 2025 Non-GAAP Net Income Guidance: For the second quarter of 2025, the company expects to generate non-GAAP net income between RMB1.75 billion and RMB1.85 billion, representing a year-on-year growth between 24% and 31%.
Funding Costs Outlook: We expect funding costs for the coming quarters to decrease slightly from Q1 levels.
Leverage Ratio Outlook: We expect to see the leverage ratio fluctuate around 2.7 times in the near future.
Revenue Growth Expectations: We expect pricing to fluctuate around the current average IRR of 21.4% for the coming quarters.
Convertible Senior Notes Issuance: In Q1 2025, Qifu Technology issued USD 690 million in convertible senior notes, with 100% of the proceeds allocated to share buybacks.
Share Repurchase Program: On March 25, 2025, the company completed a USD 227 million share repurchase, resulting in a 3.6% reduction in share count.
Total Share Repurchases: The company expects total repurchases for 2025 to be no less than USD 680 million.
Estimated Share Count Reduction: Based on current share price, total share count is estimated to decrease by approximately 11% compared to the beginning of the year.
Share Repurchase Execution: As of May 19, 2025, approximately 9.6 million ADS have been repurchased for a total amount of USD 405 million.
Average Price per ADS: The average price for the ADS repurchased was USD 42.3.
The earnings call reveals strong financial performance with record revenue, cash flow, and a solid financial position. Management's optimism about regulatory adjustments, market consolidation, and AI advancements suggests future growth. Despite short-term risks and regulatory impacts, the company's long-term strategy, including overseas expansion and shareholder returns, is promising. While Q&A highlights some uncertainties, management's focus on sustainable growth and increased dividends indicates a positive outlook. Given the market cap, the stock price is likely to see a moderate positive reaction in the coming weeks.
The earnings call summary shows strong financial performance with significant revenue and earnings growth, a high provision coverage ratio, and successful share buybacks. The Q&A section reveals cautious optimism, with management addressing regulatory challenges and maintaining a conservative approach. Despite some uncertainties, the overall sentiment is positive due to robust metrics and strategic initiatives like overseas expansion and embedded finance growth, likely leading to a positive stock price movement.
The earnings call indicates strong financial performance with a 13% revenue increase and a 59.9% rise in non-GAAP net income. Despite increased marketing expenses, the company shows stable asset quality and a favorable delinquency rate. A significant share repurchase plan and optimistic guidance further support a positive outlook. While some Q&A responses lacked detail, the overall sentiment remains positive, suggesting a likely stock price increase of 2% to 8% over the next two weeks, especially given the company's moderate market cap.
Qifu Technology's earnings call highlighted strong financial performance, with significant increases in non-GAAP net income and EPS, and a robust share repurchase plan. The Q&A section revealed stable asset quality and positive management outlook, despite macro uncertainties and increased marketing expenses. The strategic initiatives and optimistic guidance for 2025 support a positive sentiment. However, concerns about regulatory impacts and increased delinquency rates temper the outlook slightly. Given the company's market cap, the stock price is likely to see a positive movement of 2% to 8% over the next two weeks.
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